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AUTOMOBILE INSURANCE - Compulsory government schemes - Liability coverage - Settlement agreements - Exclusions - Intentional or criminal act

Monday, November 13, 2017 @ 12:55 PM  

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Appeal by a third party insurer, Aviva, from a judgment finding it liable to pay a settlement agreement owed to the plaintiff. The plaintiff, Middleton, and the defendant, Pankhurst, went ice fishing at a remote location, accessible by snowmobile. Although the defendant held a valid licence to operate the snowmobile, he was subject to a probation order that prohibited him from driving at night and/or driving with alcohol in his system. Both parties consumed alcohol while ice fishing. The plaintiff left the scene on foot. Later that evening, he contacted the defendant via cell phone and stated he was lost and disoriented. The defendant believed the plaintiff was in danger due to the cold weather. The defendant drove his snowmobile until he located the plaintiff. In the course of transporting the plaintiff, the defendant lost control of the snowmobile. The plaintiff was ejected into a telephone pole, suffering significant injuries. The parties settled the plaintiff's personal injury action for $900,000. The defendant's insurer, Aviva, took the position it was not obliged to pay any portion of the settlement on the basis the defendant was not legally authorized to drive. The trial judge found Aviva liable for the settlement funds owed to the plaintiff. The judge ruled that the term “authorized by law” referred strictly to licensing rather than court orders, and that the defendant was authorized by law to drive the snowmobile by virtue of holding a valid licence. Aviva appealed.

HELD: Appeal dismissed. The trial judge made no error in concluding that the probation order did not disqualify the defendant as a driver for the purpose of Statutory Condition 4, as disqualification was dependent upon restrictions imposed by the Ministry of Transportation rather than under criminal law. Under s. 118 of the Insurance Act, the term “authorized by law” did not include consideration of criminal law prohibitions in determination of the enforceability of a claim for indemnity. To accept Aviva's proposed interpretations to the contrary would negate the policy objective to provide insurance protection for negligent tortfeasors who did not intend to cause harm, and to their victims.

Middleton v. Pankhurst, [2017] O.J. No. 5661, Ontario Court of Appeal, C.W. Hourigan, L.B. Roberts and I.V.B. Nordheimer JJ.A., November 2, 2017. Digest No. TLD-November132017002